Join Daniel Wrenne as he engages in a captivating conversation with Dr. Param Baladandapani, a seasoned real estate investor, and expert in helping physicians build generational wealth through strategic financial decisions.
In this illuminating episode, Dr. Baladandapani shares invaluable insights into the world of real estate investing, tailored specifically for medical professionals. Delve into the art of making informed choices, understanding risk and reward, and the crucial aspects of building a diversified real estate portfolio that aligns with individual goals.
Discover the hidden gems of real estate investment, where Dr. Param showcases various strategies like long-term rentals, and short-term rentals, and creative ways to maximize cash flow in today’s unique market environment. Gain a deeper understanding of stress testing properties, market due diligence, and tapping into tax savings as a powerful wealth-building tool.
If you’re a physician looking to unlock the potential of your hard-earned income and build a secure financial future, this episode is a must-listen. Tune in to learn from one of the most accomplished financial experts in the field and start your journey toward generational wealth today.
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Full Episode Transcript:
Daniel Wrenne: Hey everyone. Today I’m talking with Dr. Param Baladandapani. She’s a part time practicing radiologist, a real estate investor, and mentor to other physicians looking to get into real estate themselves. She’s also a full time mom to two kiddos. We’re going to be discussing her experience in medicine and how as her family grew and life changed, she began to burn out like many of you guys.
Fortunately, she was able to find freedom from the demands of their medical career by investing in real estate. We’re going to talk about how she was able to use real estate to become financially independent very quickly and how this allowed her to scale back working to really only about one shift per week.
Now, in practice, we also discuss some of the things she’s doing now to give back and help mentor other physicians that are on their own journeys into investing in real estate. So if you’ve been thinking about investing in real estate yourself, Or maybe you even have your first property already and aren’t sure exactly what’s next.
I’m sure you’re going to find our conversation interesting. So with that, let’s jump into the conversation now.
Daniel Wrenne: But I’m, thanks for joining me on the podcast today.
Dr. Param Baladandapani: I’m so excited to be
Daniel Wrenne: on here, Daniel. Yeah, I know you’ve had a lot of professional success and a lot, a lot going on.
We were just talking about our summers with kiddos and all the craziness with that as well. So you’re a practicing radiologist. You’ve been doing that, what, is it 20 years now?
Dr. Param Baladandapani: So it’s 13 years since I’ve been out of training and worked full time for the first 10 years and then the last three years I’ve been a day a week or less in medicine at this
Daniel Wrenne: point.
Gotcha. So yeah, still practicing one day a week. As a radiologist and your bigger professional endeavors here lately, you’re getting into real estate. And I know you’ve built your own real estate portfolio but have also started helping others with real estate and have built several businesses to kind of support all this.
And that’s pretty cool to see all that. And I imagine that there’s a lot of balancing going on. I’m thinking like, Two kiddos, businesses, practicing medicine. Life is a lot to kind of balance. And, but, from my view, it looks like you’re doing a great job with all that stuff, and I’m, kind of excited to dig into how you’ve gotten to where you are today and how you’ve been able to.
I know there’s never this perfect balance, right? Or maybe you’re this one person that I’ve found has perfect balance,
Dr. Param Baladandapani: but I imagined the last person. No, you, you’re absolutely right. Danielle. So it wasn’t the plan, right? This wasn’t the intended direction. I, when I got out of training, I got these amazing jobs.
as a radiologist, you know, I’m a high, high income earner. it was the definition of success that I’d had for years where I had the million dollar house. had the 12 weeks vacation negotiated and everything was going good, you know, traditional what you how you anticipate things to be. And I realized.
along the way. Before you have kids, it’s very different. You know, you have the first child and it’s still manageable. Then you have the second child and you realize you definitely need way more time if you really want to be intentional about being present for them. And that’s when I think I started to realize that I had a lack of autonomy and have absolute control over my time, right?
So I definitely wanted to spend more time with the kids, but oftentimes they were spending the day with the nanny or in daycare. And so, it was something I was getting used to. And I always say status quo is okay if it’s not super painful. So it wasn’t super painful. It wasn’t to the point where a change needed to be made.
And so I was just cruising along till there was a rough Transition at work where that’s when I realized that things couldn’t continue the way they were. And that’s when I had to pivot and pivoting for me was about accelerating my real estate journey. That’s when I really understood the impact that that would have.
And then when I got to financial freedom, that’s when I was able to cut back. So that’s a little bit about the backstory in terms of how it worked out for me.
Daniel Wrenne: what were some of the reasons, like, if we could go all the way back to, I don’t know, like, Right before medical school.
I guess that’s kind of when you make that decision to go into the career or maybe, maybe it was sooner for you, but like, what were your main reasons, maybe two part question, like, at what age did you decide you were going to go into medicine? And then at that point in time, like, what were the reasons you decided to do that?
Dr. Param Baladandapani: Well, so funnily you know, I’m Indian and my parents knew when I was born that they wanted me to become a physician. So growing up, I just knew that I really early, like at three, I knew I was going to become a physician. So it’s always been a part of my identity. And looking back, I mean, you know, especially since I’ve cut back on medicine a big part of my transition has been really being introspecting.
There’s nothing else I would rather have done, right? So as, as a career, as something that I spent so many years training to be I just don’t see myself doing anything other than medicine. It’s just that the medicine was very different from the job that I had was more limiting medicine.
is very fulfilling. I still feel that way about it. I think the aspects of the job was those were the things that I wanted to see the change in. But medicine per se, radiology, the diagnostic aspect being procedural. I’m a breast imager. All of that was very, very fulfilling and satisfying.
But the job was very different from how I wanted to practice medicine.
Daniel Wrenne: Yeah, I have heard that Like a zillion times, unfortunately, this whole idea that most physicians I interact with seem to have got into medicine for the right reasons and have this vision of how they would ideally want to take care of patients and do healthcare.
But there’s this, that vision, and then you look at the actual reality of how they’re doing it, and it’s completely different. And that seems to have. I mean, it seems to be a big part of all this stress that exists with the profession, because when you know the right way to do something and you’re kind of like forced to do it a different way, that’s like incredibly frustrating for some people, some people have different tolerances for that.
For me personally, like I have very, very low tolerance for that. I’m like, I got to get out immediately because it’s, it’s extremely frustrating. But has that been your experience? Is that like.
Dr. Param Baladandapani: Yeah, you’re absolutely right, Daniela. So there are a few components to it, right?
Burnout is definitely a huge component, and burnout can be because the workload, what you’re expecting, your expectations at work there’s a mismatch over there, right? That’s not what you want to do, that’s not what you have capacity to do, and those expectations aren’t resetting.
Burnout could be because, and I’ve seen this with physician friends who are sometimes commuting their Four hours a day to get to a job that they like. But then it’s taking away so much from quality of work. I remember during the pandemic, you know, right after that rough career transition, you know, where it was a six month period I didn’t have autonomy.
I realized that if I didn’t get back into another job you know, I wasn’t financially secure at that point. So you have that, all of that transition. But right after that, when I got settled in, then I had another job line up and I was settling in there. The pandemic happened and a lot of physicians experienced burnout during the pandemic because suddenly you know, workload shifted the way we were practicing medicine had to shift and pivot and and all physicians listening to this will understand it was a, time of huge transition.
I went through that transition. And fortunately enough, as a radiologist, and I think many of us were able to work part time from home, but being at home with the kids being at home, and then. Suddenly, you know, shifting in terms of what your workload used to be and what you’re expected to read and a shift in that workload.
Also, all of those things actually contributed to burnout. For me, I remember there were days where I wanted the next day to be better. So I would stay up late at night after the kids went to bed to catch up on additional cases so that I would ensure that the next day was better. But in the process, I was burning out, right?
There’s so many reasons why You know, how your job in medicine actually contributes to burnout. And then there are two aspects to that. A lot of that is also your ability to set boundaries and to adapt to the situation. But a big part of it, like you said, if you’re not the kind of person, and many of us are in situations where we aren’t thriving in medicine, the ability to make a shift, right, that ability the shift could just be staying there and really defining your boundaries, negotiating better.
But if you want to get into a better situation, a lot of physicians are in a position where they’re able to make that shift. And that’s where I think financial freedom comes in. That’s where whatever you’re doing, right? Everything that you talk about, financial planning, all of that contributes to your ability to make that pivot if you need to.
Daniel Wrenne: Yeah, we always say using finances or your money as a tool is the key, like it’s not the money in itself, like money doesn’t act like having a million dollars or a billion or whatever that does nothing in itself, like, yes, how you use it is the question mark as a tool. I’m curious about some of the big decisions along the way, like maybe before you shifted out, like starting in practice, selecting your practice selecting a specialty, even like, before you were kind of into real estate, maybe how did finances play into, into some of these big career decisions or did they?
Dr. Param Baladandapani: extent they did. I wouldn’t say finances per se. I would say more lifestyle because I did, decide to go into radiology, which is one of the lifestyle subspecialties in medicine. I did decide to pick breast imaging, which again is a better lifestyle choice because oftentimes you’re, you have the ability to say I don’t want to do weekends.
I don’t want to work overnight. So you do have that ability. I think that was an intentional choice. It’s also something that I was really good at. And that helped. But think looking back, having that time for my family and being able to balance it, like you said, how do you balance it?
How are you supposed to balance it if you’re one person and you are full time in multiple things, right? So it’s not possible. And so if you don’t have that freedom of time, then everything else So I think I’ve been very intentional from the beginning about the choices I made, but even with those choices, I realized that I wasn’t really where I needed to be.
you know, people ask me all the time, how did you pivot from medicine to real estate? I don’t think that’s what happened. And I think this is, The core of what you speak to also, Daniel, when you’re making money, you know, as a physician, as any kind of professional, anyone who’s making money, you need to be investing it because if you aren’t investing it, then you’re constantly trading your time for money, but you want your money to be making money for you.
And for me, real estate was just that vehicle. It was just a vehicle I chose to really make my money work harder for me, essentially. That’s essentially it. And and the rest of it was just a passion project. It started off as, okay, I want to talk about this because do you know this, Danielle, I’ve listened to your podcast and the topics you pick, right?
These are such important topics. A lot of us struggle with this, but there’s never a.
It’s just a question of talking to people about, Hey, what are you doing with your money? How are you investing it? Because if we’re not intentional about it, we’re going to land up somewhere where we don’t want to be.
Daniel Wrenne: Do you think financial literacy was a big part of it?
Dr. Param Baladandapani: So I don’t think there’s ever a focus on financial literacy, right?
So right now, listening to your podcast, there are so many people talking about it. I think 2010 when I came out of fellowship, I think it was a different world back there. I don’t think there were so many people talking about all of this. I don’t think it was part of our curriculum in school.
It’s not something we talked about as a family, especially if you’re a physician. The understanding is that your income in medicine is your financial security, which is completely not true because that job it’s not in your control and therefore that income is not on your control and you’re trading your time for money, right?
If you don’t put the time in, you’re not getting the money. So financial literacy is important, but there really isn’t a focus on it in school, in families, in our circles. And so I had mentors who taught me what they knew, which kind of got me started. So 2014, I got my first rental. I got a couple of rentals along the way.
But I didn’t really know what I was doing with them entirely. I was somewhat financial literate and people taught me what they knew, but there was so much more to learn. And as soon as I learned that I was able to pivot. So financial literacy is absolutely imperative. I mean, for anyone, right.
But there aren’t really conversations about it. And I would say 15 years ago, the resources weren’t there. I think it’s easier now if you want to go in and read blogs and understand. but that’s where having someone assist you with the planning or maybe I think mentoring and coaching in that space is so helpful because just listening to things here and there, it’s kind of hard to have a, you know, a systemized roadmap, right?
So if you have someone who can actually look at things holistically and help you build that roadmap, I think that’s really important.
Daniel Wrenne: Yeah. I know you’re probably experiencing what you’ve experienced it on both ends. You were saying like you had a mentor. And I imagine we haven’t talked about this yet, but I imagine you’ve kind of experienced it on the other end of being the mentor helping someone kind of learn or make a plan or whatever.
I’ve experienced that working with families. It’s like. The light bulb goes off or it’s like, connecting financial literacy to like your ability to enjoy time with family or like, know, there’s a lot of different ways this kind of plays out. But like one thing I have noticed is similarity to a lot of these people like you that have had success here is that there’s some component of another person that helped them kind of like get over the hurdle.
In other words, it’s really difficult or maybe impossible to go at it alone. I think so,
Dr. Param Baladandapani: Daniel. I mean I remember one of my colleagues at my first job out of fellowship, he was a third generation real estate investor. and he kind of got me started. He connected me to his team. he told me how to invest in the stock market.
He told me what to do with real estate. And I think if he hadn’t. Really guided me and I would teach him breast tomorrow, which was something he was learning on the go. He hadn’t actually trained to do it. And so he taught me how to invest in the stock market and real estate. And I don’t think I’d be here if I hadn’t had the perspective shift that I had because of interacting with him.
Right. And so that’s what oftentimes, and you understand this, right, what we’re doing is we’re just presenting people with multiple different options. so they have different perspectives to pick from. So, and they’re more intentional about what matters to them. And it’s not a one size fits all, but really being able to see what your options are.
It’s really important. And I think having someone who kind of shifted that perspective for me and got me started, if I hadn’t started, if I hadn’t seen the impact of that one. 150, 000 property had over six years, I would never have taken the step to really accelerate when I did. Right. And so I think it’s really important at having those people at the right time, the earlier, the better, because then you have the compounding effect of time.
Daniel Wrenne: Yeah. And so you originally started out, you had, you were doing the real estate while also practicing medicine full time, right?
Dr. Param Baladandapani: So I was, and so the, funnily and I say this all the time, it’s like when I didn’t have kids and I had all the income and I, all the time in the world, and I was in academic medicine I didn’t realize the impact of real estate investing.
Right. So I, I bought this, my first rental property, it was putting 500 bucks in my pocket every month. And I thought, well, how is this ever going to get me to 10, 000, 20, 000. So I was like, okay, well, this doesn’t make sense. I put it on the back burner. And then I purchased something without leverage.
So again, doing things, not really doing them the right way, I would say, looking back, but I at least
Daniel Wrenne: got started. And was your first turnkey, like a outsourced, like you had a manager and the whole thing.
Dr. Param Baladandapani: Yeah, exactly. And so my mentor would invest out of state with a property manager. It never laid eyes on his properties.
And so that gave me the perspective that I could do that. And I was living in California. I wasn’t sure if we were going to settle down here. So I started investing in Texas. And I didn’t have any barriers around that because I saw him do that successfully. But I would say even then I didn’t realize the impact, but then looking back in 2019, like I said, status quo is fine.
You know, as long as everything you’re sailing, it’s okay. But when I had that crash, that’s when I looked around and I was like, okay, so what’s my stock portfolio looking like? What does real estate look like? And then I saw that with a third of my money in real estate. I was getting twice as much in passive income, because at that point I was thinking, what about passive income?
Right? So what if I don’t go to work tomorrow? What happens to my family? And that was like the light bulb moment for me. Like, so six times the passive income. Why is that? And then that’s when I learned about the 4% safe withdrawal rate. And I was like, wow, I need to have two and a half million in my retirement accounts if I want to pull out 100, 000.
But real estate, it was like, you know, a fraction of that invested in real estate, even doing what I was doing, which was just buying them turnkey, keeping them super passive and having someone manage it. I get to get to that point so much faster. But then along the way I learned so many other strategies, you know, for high income professionals, we’re paying multiple six figures in taxes.
There are ways that depending on what you invest in, right? Short term rentals, you may be able to, some of our members shelter a half a million dollars of income from taxes, just by virtue Of investing in short term rental. So so many different ways to do it. That’s when I accelerated. But yes, when I was doing that, I was still working full time on I had that was during the pandemic, right?
So the kids were home and working full time. I was still able to get to financial freedom within a year. plan was a three year plan. I got it within a year just because of getting more literate in terms of Okay, what is this? And what can I do? And how can I accelerate? so I say I did it.
Yeah. When I was working full time and I had two kids during the pandemic, I didn’t really do it when I had all the time in the world and, you know, didn’t have kids. So a lot of that has to do with the fact that, you know, when your mindset shifts, that’s when you’re able to do it. When you see those, have those different perspectives, when you have the, the, the knowledge in terms of what you can do with it.
Daniel Wrenne: I imagine with all that going on, that was tough to balance. I mean, everybody’s busy and there’s never any spare time, but that sounds like a lot.
Dr. Param Baladandapani: it does and it’s funny because I had a friend and this was a time I was acquiring three properties and I was rehabbing a property without a general contractor and so she calls me and goes you know I don’t know maybe you should slow down and I was like wait but it isn’t that bad because the three properties I was acquiring this my systems were down pat where you know I was acquiring them out of state and it would take me two hours tops from But I tell my agent, I need I need to acquire something to when the notary comes home and has me sign the you know, they actually come home and have me sign all the paperwork.
So two hours per property over the, you know, over the course of the acquisition. So it really wasn’t as much work and then the rehab was something I was doing because I wanted to get the tax savings at that point. Right. So I wanted to be a little more active because I wanted to, again, it was about my goal, which was to get to the point of financial freedom faster.
And I wanted to do it when my kids were little, not like 10 years later. And and so I was hustling a little bit at that point, but even then I was probably spending one to two hours a day. On real estate, which isn’t a lot considering the fact that if I wasn’t doing that, I was probably watching two hours of Netflix.
And so it was a choice. It was like prioritizing what I wanted to do. But, say this, Daniel, and you know, again, it’s not a one size fits all. So it’s, it’s going to be, I say, I think of real estate investors as three different categories, right? When people try to think about it and they’re like, well, I don’t know if I can do this.
It could be what I call the investor or the legacy builder who’s doing it slowly, right? Slow and steady. Buying two rentals, turnkey, you know, getting a property manager to manage it would probably take you 10 years to get to financial freedom. You could do what I did and I call that the short term hustler, where you’re doing midterm rentals or you’re doing rehabs and you’re hustling for a short two to three year period, but you’re getting to financial freedom that much faster.
Or you could be what I call the entrepreneur who loves, who thrives in this environment, who really likes Setting up spaces and running short term rentals or, you know, syndicating apartment complexes and being a general partner. And they like that. They like the business of real estate and they want to do it.
And so you could be. Anywhere along the spectrum the entrepreneur obviously gets all the tax breaks and you know, they, they accelerate much faster. The short term hustler does it for a while and then they, they just set it and it just, you know, that’s what my, my current rental portfolio, I spend 15 minutes a month on it and it’s just generating passive income.
Or you could be someone who stays super passive from the beginning and that’s what you’re trading, right? It’s a trade off between time and returns essentially. And there’s a spectrum and you get to pick where you want to be on it.
Daniel Wrenne: Do you think if medicine had played out exactly how you’d envisioned on the front end, like if it had been not a messed up health care system or, you had been able to practice medicine how you’d hoped or if there wasn’t, and maybe on top of that, if the pandemic hadn’t happened and if all these big things that were kind of like stress points within the traditional track and medicine hadn’t happened.
Do you think that you would have still gone into real estate? Or do you think it could? How would it have played out in your mind? Do you think it would have been different? Or do you think you would still ended up where you are? So,
Dr. Param Baladandapani: if I knew what I know today, I would have still done the real estate on the site, right?
I don’t know if I would have started to grow in the community and done all the education part of it. I think that came from a place of pain where I saw that, you know, there was a need for people to talk about it and the need for people to be more physicians to be more financially literate. I think that came from a place of pain.
But if I mean, Knowing what I know today, I would totally have started investing. Like I said, you’re, you’re always investing, right? Even if you’re putting your, your money under the mattress, that’s just your choice in terms of what you want to do with your money, right? So you always are placing it somewhere.
You’re placing it in a CD. You’re investing it in traditional retirement accounts. You’re investing in real estate. Real estate is just. It’s definitely higher risk adjusted returns. So when you know what you’re doing, you’re significantly lowering your risk and you’re significantly increasing your return.
So I don’t see a world where I wouldn’t be investing in real estate. I probably would not have started the community. I don’t think the healthcare system is messed up as such. I think what happened is that my needs transitioned, right?
When I was. single I could spend 10 hours a day in medicine and that was perfectly fine. Five days a week. I think as the family started growing, I just I wanted to make different choices and there wasn’t a place for it in medicine. I wanted to go down to three days a week.
I tried the compressed schedule thing where I was working 10 hours a day, four days a week, and I started burning out, you know, it just wasn’t sustainable. Although on paper, it seems like it’s better. I think it was just. you know, your life situations change, where you are now, maybe in a different place, five years from now, having that flexibility is super important.
not being able to tailor your lifestyle based on your needs at any specific moment that can be very frustrating. And I think that’s where having financial freedom. and decoupling your income from your job. It’s I’ve spoken to many physicians who have cut back intentionally a because, you know, because they’ve gone through the program they’ve now a portfolio and they can do what they have passive income, but also just because they had to, it’s always hard to transition and to cut back in medicine.
But I think having the choice becomes so important. So I would have loved to practice maybe two days a week in medicine at most, if that was an option. It wasn’t really an option for me to go up to two. So I went down to a day a week in medicine. But I think it’s always about, yeah, it’s, it’s always a transition and having the flexibility to do things at any given time.
I think that’s important. That’s what financial freedom gives you.
Daniel Wrenne: so you’re down to one day a week, And you’re also financially independent now and I mean that that nice thing about that is you had all kinds of flexibility and you know, you could go all sorts of different directions and you know, as long as you’re willing to use your money is the tool which you’re doing a good job of and that that’s really good to see.
I’m curious about the scaling back part in medicine. and I’m wondering if you felt any, guilt or shame and. Or pressure from other people about like scaling back. did any of that happen or was it pretty seamless transition for you?
Dr. Param Baladandapani: I think the identity part is hard for all of us and it sometimes seems like it’s the people around us, but oftentimes that’s just.
The park within us, the guilt within us that is hard to deal with. I’ve learned to realize that, every time I feel something because someone said something, it’s because I have, did that doubt within myself. It’s hard. but I think what I’ve come to realize is that I will always be a physician at heart, that medicine, you always take it with you.
I always constantly get consults. I’m Assisting and helping people and giving advice as a physician, mean, I haven’t cut back completely. And I think a big part of that is because it’s hard to let go of that identity, but I do know other people in the space who have grown their portfolios where they’re cutting back only because oftentimes it’s because, you know, they want to work.
A few days a month, and that’s not always an option by the way. Organizations work. it may not always be the right fit. and so you’re so it’s, it’s, it’s a choice between working full time and then, and not being in medicine. And many people choose to not be in medicine at that stage in life, but I think it’s always a hard transition, but oftentimes it’s us being hard on ourselves more than anything else.
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Yeah, I’m a big fan of real estate and, obviously you’re a good example of how real estate can work out really well I mean, you can look at a lot of like the wealthy people. in the world and most of them have been investors in real estate. And so I think it’s pretty safe to say like, generally speaking, real estate’s a great place to invest in, and there’s a lot of different ways to do it.
And, maybe we can get into some of those options here in a second, but I’m curious about like balance of things. So like real estate’s great. And I think that’s a pretty safe statement, generally speaking. healthcare is a little bit of a, I said it’s a train wreck. I mean, it’s not, there’s some problems in healthcare.
and I think that there’s a lot of burnout and stress, and a lot of, physicians are looking for alternatives. And so, I see a lot of physicians naturally, for good reason, turning to real estate. as a solid solution to kind of give them some freedom from the stressors that come with practicing medicine.
and I like that. I mean, that’s partly why we were talking before we started recording. That’s partly why we’re talking and we’ve started kind of getting into real estate is because it can be a great. solution help make this shift. But one of the concerns I have, is probably more as like a patient side of things, or maybe just more of like a big picture for the country sort of thing.
Like I see a ton of physicians getting out of medicine earlier. Then maybe they had expected to do things like real estate or side gigs or, you know, just retiring early. And as a patient, I’m like, Oh, no. I am concerned about my future or my kid’s future of like being able to get quality healthcare, but being where you’ve gone in your life.
I’m just curious to get your thoughts on this, this idea.
Dr. Param Baladandapani: So, I think it’s always a demand supply question, right, Daniel. So I feel like if we get to the point where there is actually a shortage, then the terms, the ability to negotiate, the number of hours you work and the number of patients you see, all of that’s probably going to transition also, I think the equilibrium will always be there where physicians will have the option to practice medicine in a safe way and also provide care. So if we ever get to the point where more people are doing that, then you know, and we actually have a mismatch and demand supply, the feeling will reach an equilibrium or physicians will be able to negotiate better terms.
So I don’t see that as the direction. Even within our community, I cut down to a day a week. And that’s because my kids were the Three and five when I got a financial freedom, and I just wanted like the last two years has been I’ve spent so much time with them. I’ll never get that back. They start school in August.
So I was at a different stage in my life. I know multiple physicians within our program. Who have cut back and all they want to do is go down to three days a week, right? Three days a week will just be, that’s the balance that they need. and so that, I think that’s a healthy balance for someone who’s worked in medicine for 20 years, who wants to go down to three days a week.
I think that that’s a very healthy balance for people. There are people who Love medicine, love the way they’re practicing it. and they just want the passive income. So there’s no pressure. So they’re able to go in and negotiate better terms for themselves. And so I think there are people on different ends of the spectrum.
and again, I feel like if you ever get to the point where there is an acute shortage, then we’ll be able to negotiate better terms. Awesome. I think that that equilibrium will be reset. We’re just not, like you said, we’re just not at that point right now where, I know primary care physicians who have a 15 minutes slot to see a patient before we have the next patient after 15 minutes.
They’re not doing justice to patients. The way that is and they’re, I can see it. They’re burnt out every day. that needs to shift. and this is just giving the healthcare providers more control so that they can negotiate better terms for themselves is how I see this going.
My case is different because for me, I was at the point where, You know, that was just a change I needed to make per se, a state in that stage of my life. Right. But people who have older kids and people who, everyone has different needs. And I think this just gives people options, right? Where we aren’t handcuffed, right?
So it’s not the golden handcuffs. Right.
Daniel Wrenne: Right. And that’s the worst because if you’re, like, I think of like the early career, like, let’s say you’re just going out of getting out of training and starting to practice and you go to a hospital and you’re like, you go to meet with them first time.
They introduce you to the realtor. They show you in the nice neighborhood, you buy the 2 million house. And then you sign the five year contract that’s locked in with non competes and the big bonus that you got to pay back if you leave early and you get the private schools and, and then, oh, there’s tail coverage you got to pay for if you leave and like, and then the RVU thing kicks in after a couple of years and you realize, oh no, I got to actually like, work harder than I had initially realized on the front end because I had the guarantee and it’s gone away and all those things kind of like build and they’re not in your favor and they lock you down hard aka the golden handcuffs and like you mentioned and those are that’s the opposite of freedom and that’s not a good spot to be in but the more physicians are able to negotiate or get better terms like on those sorts of things that’s Or even just have financial freedom, like when you have financial freedom, you could be like, no, no, I’m not exactly, you can
Dr. Param Baladandapani: put your foot down and say that this is what is best, in my opinion, is best for the patient.
And this is what I’m willing to do. And it gives you the ability to do that because a lot of physicians are frustrated by their jobs, but they’re doing it not because they want to go in every day, it’s because they have to. And it’s just about shifting that from where they get to go in and they want to go in and they’re not doing it because they
Daniel Wrenne: have to.
Right. So you’re doing, you started out doing a like kind of hiring a manager, direct ownership, right? So you bought a property. We’ve had some people on to talk about turnkey investing. You know, it’s kind of like pretty passive. Like you do, you still have to select the, company to like manage the whole deal for you, but it’s, it’s pretty much, you know, not a whole lot of work.
Right. You just select the property and they kind of do the whole deal. And it’s pretty, but you know, there is a cost that comes with that. Right.
Dr. Param Baladandapani: Yeah, that’s the education part. So like, even within the, you know, like I said, I like to classify them as three different categories, right? So the, the, the investor is the person we’re talking about who’s like, you know, wants to be very, very passive, doesn’t want too much time in it, and they can choose to invest passively in apartment syndications where they just have to vet the sponsor, find someone they like working with and work with them, or they can buy their own turnkey rentals, right?
Both of those are passive. I would say there’s a little bit of trade off over there when you’re Direct with direct ownership, you have slightly higher returns, but you need to be somewhat educated, right? You have to pick the right market. You have to pick the right team. You kind of have to run your numbers.
And you know, we, we have tons of free calculators and there are other people who have those free calculators, but there’s a little bit of education that goes into it. So you don’t want to just jump in and buy something and then, and then find that, Oh, well, I can’t evict someone because it’s, you know, I’m in a tenant friendly state or the numbers don’t make sense.
And I’m pouring money into this a thousand grand goes in that, that’s not the situation you want to be in. So there’s a little bit of upfront education. But if you get that right, then you could get to the point where, like I said, it’s like 15 minutes a month is what you’re spending on your portfolio because it’s, you know, you’re not going in doing rehabs, it’s like turnkey, simple, someone else is managing it.
So you can build a system. And that’s where I think the whole point of me starting to talk about it was for people to see that. Even direct ownership can be super passive, right? That’s that’s an option. And then you have the ability like to be like a hustler. Like that’s what I did.
I started off super passive. Then I moved into how I’m going to do rehabs and increase the value of these properties, increase the rents, take all that money, do a refinance, and then buy something else. I’m going to do all of that, but I’m only doing it for a year or two. And then I get to, it’s very fluid.
I get to go back to that passive state and just let it ride out and have property managers And I think it’s important for people to see that a you have options and you always have the ability. And, you know, the reason I went into that mode was because I wanted the tax savings, right? I wanted to, you know, really accelerate my growth by getting those tax savings and sheltering my clinical income from taxes so I could use that to grow the portfolio faster and get to financial freedom faster.
But then right after I hit that point. I don’t do rehabs anymore in my personal portfolio. We do that with the apartment syndications. That’s a different thing with my personal portfolio right now. I like to just buy turnkey, went back to the same strategy, turnkey class, a properties, nice tenants, properties that make sense in landlord friendly states, right?
So you get to pivot at any point. And you can keep it super passive. I think are the takeaways over there.
Daniel Wrenne: Yeah, I think either way though, you gotta get some baseline education and a lot of, a lot of the resources you’re providing. they’re solid for those sorts of like, educating yourself on a baseline, especially, I mean, if you’re going to go the passive route, like we’re saying with turnkey, for example, or going into syndication or something still have to have some level of education.
I definitely encountered a lot of people that think that they don’t need any education. So that’s, that’s a misconception.
Dr. Param Baladandapani: It’s dangerous. that’s why I started talking about it because. I see friends all the time making mistakes, and I’m like, we’ll talk about it and you only present options to people and we’re like, well, yes, the sponsor doesn’t have a great.
I mean, they don’t have a track record. So I would really be careful about that. And then you see them after six months, they’ve invested half a million dollars and they come in with pulling their hair out saying I need to get my money out because of it. Partnership is fracturing. So, okay, well, that’s the due diligence part, right?
So you need to do that up front. So even if you’re a passive investor in direct ownership or syndications, that, that initial due diligence, I think needs to be done to some extent. And, and it’s hard for people to know what they should be looking at. Okay. What do I look at in the market? What do I look at, you know, in my team, what do I look for in the property?
And so that’s, I think that’s where. We do a lot of free you know, free education. We have free live events every year where all we talk about is, okay, this is the due diligence you need to do, your free eBooks, but it’s like putting everything together in one place where they go in knowing something.
So they’re making the right choices.
Daniel Wrenne: Right. Yeah. And if you’re listening, if you work with us already, like one on one, we can kind of help with some of the like higher level, especially at a minimum, like having a second set of eyes on things. at a minimum, I think that’s one of the biggest things is if you can just be running your ideas through Yeah.
doing some checks on them to kind of get some additional input. that’s a huge deal and it’ll save you lots of headaches and gets you kind of to that baseline. But then from there you got into a little bit more active investing where that starts to take more time, but typically see a lot better.
Returns or you should see a lot better returns when you get your hands dirty and get more involved. The trade off is you got to spend a lot more time, but it’s a much faster way to grow your portfolio. Right.
Dr. Param Baladandapani: Yeah, absolutely. And that’s the thing Daniel, You know, when you’re when you’re growing up and you hear about money, people just say, okay, you want to get to financial freedom sooner, work harder and earn more and spend less and all of those things.
And all those things are important. But there’s only so much more you can work, right? Especially when you have two kids, you realize, okay, wait, I don’t know if this is going to work anymore. But the thing that people don’t talk about is that yeah. what is the return, the ROI, if your overall portfolio, like no one talks that when they talk about financial freedom, because all you hear is the you know, the 4% safe withdrawal to the 25 X, your annual requirement, that’s where your portfolio needs to be.
All of that is built for the stock market. And that’s based on that 4% safe withdrawal. You can only withdraw 4% from that stock portfolio and retirement. The funny thing is that we actually have a retirement calculator on the website. and there are so many other retirement calculators where you can actually plug in the numbers.
And if you go from that when I plug my numbers in, it would take me 17 years to get to financial freedom, investing in the stock market. But with real estate, the passive real estate that we talked about, right, those passive strategies, you get 20% annualized returns every year, right? That’s what the lower risk profile.
And I mean, we can get into that if you need to, but when you get active, right, when you said, when you spend more time on real estate news, You get active and you start tapping into those advanced tax strategies, we can get up to 200% ROI in year one. And so that’s the, it’s a game of returns essentially when you plug those numbers in.
And so even if you’re a conservative and say you get to a point where you’re getting 70% ROI, cause you’re doing a short term rental, you’re getting the tax savings. you can get to financial freedom in two to three years as opposed to 17 years. So like to look at it as a game of returns.
All right. And there’s a spectrum it’s time versus returns and it’s also risk versus returns. And I think where you want to be, but real estate is definitely significantly higher. So you can go all the way up to 70% ROI over your portfolio. Once you’re factoring in cashflow or tax savings and equity increase over time.
And that’s what I kind of want people to understand. So when you change those numbers based on the ROI of your portfolio increasing, once you add real estate in there, that’s when you’re really accelerating the financial freedom. and so, there’s even an ebook on our, on our page. It’s a free ebook you can download.
Where I talk about, you know, the first property, it took me six years to get to the point where I pulled all my cash out the second property. I pulled all my money out of that deal in six months. And that’s the game of returns, right? So when you’re able to do that, that’s what’s really accelerating you, which is why I think it’s from leveraging, from leveraging, from equity increase, from the tax savings, from forcing appreciation, all of those things, you can actually bump those returns up significantly, but that requires more education.
And then it does require more time on your part.
Daniel Wrenne: Yeah. So basically, I mean, at a minimum, you get, I think you got to understand, especially the more active you’re going to be in it. You got to understand all these concepts, like for sure, like at least otherwise
Dr. Param Baladandapani: you’re learning from your own mistakes, right?
Like you said, you don’t want to do that when you have someone reviewing that and giving you a different perspective, then you’re learning from them as opposed to learning from costly mistakes that you’re making yourself.
Daniel Wrenne: Right. And they can be huge, massive, especially when you talk about leverage. Like when you talk about leverage, there’s the downside.
Risk is a lot bigger. And you know, you don’t want to make a mistake with being over leveraged.
Dr. Param Baladandapani: Especially with commercial loans, commercial loans, a whole different beast where leverage is like be very intentional about how much leverage you have on those properties with conventional loans.
They’re more forgiving, but you still don’t want to have, if you’re trying to get financial freedom, I see people all the time. Getting something with a 15, an investment property with a 15 year loan in a, and a high cost of living market like the Bay Area or LA. And they’re pouring five grand into that property every month.
Now that’s a different kind of handcuff where you’re handcuffed to your job because you need to keep feeding the property in the hope that 15 years later you get to a point where it’s giving you returns. But yeah, so really being intentional about what you’re doing, I think is key, understanding what your overall goals are.
And then. Picking from that spectrum. So I’m just like trying to show that there’s a whole spectrum in terms of effort, risk and reward. And you get to pick and you get to pivot at any point and it’s very fluid, but that’s where kind of educating yourself and and having a mentor or having someone who can guide you becomes really helpful.
Daniel Wrenne: Right. I think you know, there’s a lot of different ways to make money in real estate, but you got to Start to understand all those options for starters to even know which direction you might want to go. And then you got to start to learn from someone and then experience it yourself. That’s where you really, once you kind of mix all those together and you start experiencing it.
There’s a lot of people I know and come across that own like one property. There’s a whole bunch of people that own like one property. And part of that was because so many people got their first property in like 2008 or nine. That’s when real estate tanked. In fact, I was a real estate investor after 2008 because my age group and older, we were buying like our first house in like 2007 and the real estate market tanked.
And so you got a ton of people like. Say you bought a house in Florida, real estate cut in half, and then you’re like, I can’t get rid of this thing. It’s lost half its value. And so they became overnight you know, real estate investors and they have one property. That’s not the ideal way to get into real estate.
It’s there’s no intention behind that. It’s kind of just like a. solution to the problem that you’re in. And typically those types, including myself, didn’t have like a ton of like knowledge yet around how to do it. But I’ve noticed there’s a, even still today, there’s a whole bunch of people that just have like, Either have owned one or maybe two at the most properties and they have a hard time getting over that hump.
But I think a lot of it has to do with just not getting these baseline things that we’re talking about, covered, like doing the numbers, the basics are not educating themselves, not having a team of people around them.
Dr. Param Baladandapani: I think that’s the most important thing, Daniel. I like to call them accidental landlords because either it’s because they purchased a home and moved out of it and they started renting one, or they are someone who saw home prices appreciating so quickly between 04 and 05 and then they did it for appreciation, but they purchased properties that weren’t cash flowing day one.
And so a big part of what you want to do is find something that’s cash flowing day one, because here’s the thing, property prices tanked after 08, 09. But look at what happened to rents Nationally, right? historic numbers for rents in that period. Oh, wait, rents dropped by 4% nationally.
Oh, nine, they dropped by another 5%. And then they started shooting back up. So if you had a cash flowing property where you had that 10% buffer built in, that’s why we stress test properties. That’s why we use calculators. that’s why we have those resources available for free. But if you’ve done that, and you’ve stress tested your properties, and you have that 10% buffer, You would not have had to feed that property from day one.
It would have just sat there, rents went up. And then here’s the interesting thing about inflation hedge, right? Your rents are going up, but your mortgage payment is fixed at that level, whatever you got it at. And so over time, your cashflow is increasing. So if you got something at 08 before the crash and that property was cash flowing and you were able to hold it with a 30 year mortgage, you would be doing phenomenally well today.
Right. And then the problem is people didn’t have cash flowing assets because they were banking on appreciation. That’s a mistake. You don’t want to make. I know a physician who bought 64 units, these apartment buildings in 07 and 08, but he got the right kind of debt on them. Now again, commercial loans, that’s, that’s a whole nother beast, but he had the right kind, he had seller financing, so he could just hold it.
Right. And he did phenomenally well, even even though prices tanked. Because he had the right debt on it, but you don’t have to worry on it. If you have conventional mortgages with a single family home and he had a property that was cash flowing, right? So that’s the only thing. And then you have inflation help you.
And then time help
Daniel Wrenne: you. And long term, like, you know, a lot of these direct ownership, like long term rentals, for instance, that’s you should ideally view it as a long term thing. So like you should be prepared for the market to tank unexpectedly. You never know. And that should be like. Kind of a, just the thing that happens that’s just a blip on the radar, but like, it doesn’t matter that much 20 years from now, you’re still going to do the thing and it’s just going to, and if you’re doing it for cashflow reasons to, like you said, like that typically doesn’t have as massive of an effect or it shouldn’t, it should already have been built into the equation that it should be.
Dr. Param Baladandapani: Exactly. Yeah. And I think historically home prices go up by 3 to 4% and that’s just inflation match. And if you look at if you factor that that drop in and you still see where we are, we’re always at we’re actually home prices are increasing above that inflation baseline, right? And so yeah, as long as you have a long term strategy, as long as you’re buying in the right markets.
And so every yeah. Real estate is very hyper local. Every market performs well. This is where market due diligence comes into play, right? If you’re buying something in a landlord friendly state where there’s tons of population growth, industrial diversification, where people are migrating and their incomes are going up, then you’re safe, right?
Because then you have the ability to exit that deal.
Daniel Wrenne: Right, right, right. Well, there’s a whole bunch of stuff with real estate we can get into. I wanted to touch on a couple different things. I know we’re running out of time, and there’s about actually more like 15 things I was hoping to get into, but there’s two things I, hopefully, we have time to get into that I was, I was hoping to ask you about.
The first thing was kind of thinking about the current situation with real estate in the future. It’s a little bit of a unique market in some regards, like interest rates have gone up a fair amount and then prices have gone up as well, especially some of these, in some of these desirable areas.
And so it’s made some of these calculators, like if I’m running the typical calculator on a rental property, it’s become a lot harder to make my calculator work. Lately, especially. I feel like as, as an investor, get wanting to get into it, it’s become almost like a hurdle for me if I was already a little gun shy.
And I’m like, Oh yeah. So I’m curious to your thoughts on that. And then the second thing I wanted to make sure and hit on is how do people find you? I wanted to talk about your community and kind of make sure we get this in there as well.
Dr. Param Baladandapani: Yeah, absolutely. Let me get into the first thing. So everything you talked about is a hundred percent correct.
Daniel, we’re in a very different environment than we were in two years ago. Interest rates are super high. Prices. So transaction volume is super low because people have locked in interest rates at 2% they’re not getting out of it. And that is causing that what that’s doing is that it’s keeping prices elevated and not letting them drop.
Right? So between the high interest rate and the high prices, if you’re looking for a turnkey rental, That’s going to cash flow. You know, you’re lucky if you find something that breaks even in a, in a really good markets. And so our strategy has to shift in these times. And so in our, within our program, we’re constantly coaching.
People are constantly acquiring what we’re doing is I look at it as three different things, right? I would say. Which what we’re buying is different. We are trying to buy properties at some discount if possible, right? A little bit of discount. So in most markets, prices have reset between 10 to 15% between the peak that we saw last year.
And so there is a little bit of discount over there. You want to buy for the long term. This is what we just talked about. And you want to buy something that is Cash flowing. That’s the most important thing. So being really intentional and then picking the right market. If it’s short term rentals regulations, you really want to be careful about what you’re buying, because it’s not a time where you can buy anything and you’re going to do well.
The next part is going to be, how do you ensure you can hold this property. You know, no one has a crystal ball and there’s a there’s a best case scenario. There’s an expected reasonable case scenario in a worst case scenario. I think we should all plan for worst case scenario because the rest of the other two scenarios don’t really matter.
You’re not planning for it. Right. And so that can give you make you feel better, but it’s really useless. So in terms of can you hold a property? This is where I say, use the calculator stress test all your deals with short term rentals. We’re dropping revenue. We’re dropping revenue. The average daily rates by 10% but dropping occupancy by 10% and seeing if those numbers still make sense because you don’t want to be feeding these properties with long term rentals.
Drop your rents by 10% and see if you can sustain it. Will that happen? It may not happen. We may have a soft landing that’s more likely just for the way things are, but we are always planning for worst case scenario, right? And the final part is what I like to talk to investors about. So we don’t have control over.
what market prices are going to do, right? That’s something that’s completely out of our control, but that’s just one factor of real estate investing. So if you can find ways to increase your cashflow for some people that is doing midterm rentals and in with, you know, taking a single, we have members in our community who take a single family home for 400, 000 that they could rent for 2, 500 as a long term rental and they furnish it and they rent it out for.
10, 000, right? As a midterm rental. And so they’re tripling their cash flow with that strategy. And it’s not as time intensive as short term rentals. There are others who will buy a short term rental and get, you know, higher returns by doing that. So
Daniel Wrenne: it’s midterm, like six days to six. What is the definition?
Dr. Param Baladandapani: month, one to six months. Typically, so if it’s less than a month, you know, it’s still considered technically a short term rental you know, by the IRS, there are different rules. We don’t, if you want, we can get into it if you need to, but anyway, anything more than a month is typically midterm rental.
And then you can go in and rehab something, right? Find something, which a first time home buyer, like I got a property. To a few years ago where it was, I got it for 360, 000. First time home buyer wouldn’t touch it because the carpets needed to be changed. The appliances were all shot. I went and I put in 15 grand.
That’s it. Completely. You read it. The whole place got countertops change. So it was only 15 grand and property value went up by 100, 000. Right? So yeah, those are the strategies that you can do, but you need to be a little creative. Think outside the box and then tapping into those tax savings, right?
That’s something doesn’t matter. What the market does in terms of pricing, as long as you are, it’s based on what you acquired the property for. If you’re tapping into that, that gives you a buffer, right? So you have all these other additional things that you can do. But I think it’s a time where if you’re willing to buy long term rentals and have a break even and write it out and then refinance when rates go down, that’s probably The only way you can get turnkey rentals, you could try different markets.
Some markets tend to cashflow better. So hybrid markets tend to do better in terms of cashflow. The Midwest tends to do better in terms of cashflow. So for someone for whom cashflow is really important, you may try different markets, but, or you shift your strategy and then you tap into additional savings.
So that’s what I usually like to say, okay, be intentional about those three key components. What are you buying? How can you, can you hold this property, you know, and still have it sustain itself and then control the things that you can control because there’s so many things you can as long as you have a longer term strategy, prices will reset and like I said, revenue doesn’t really drop as much.
And so all you’re doing with your stress testing is factoring in the 10% drop that typically happens during recessionary
Daniel Wrenne: periods. Yeah. Good stuff. Cool. Well, where can people find you? And maybe you could tell us a little bit about your community.
Dr. Param Baladandapani: Yeah, absolutely. Daniel, we have grown we have a community of about 10, 000 positions.
It’s generational welcome D. We’re online. I love educating. I love speaking about this. We have a free Facebook group and then we’re on all the social media platforms. And on our website, we have tons of resources. The financial independence worksheet and retirement calculator I was talking about is in the resources section.
Calculators for long term and short term rentals for anyone trying to purchase something now, just, you know, if you want a stress test, use those calculators. Those are available. I have a free ebook where we talk, I talk about how I did it. So kind of like a, you know, an overview of how you can think about real estate and how to educate yourself, how you can do due diligence, but we also host two free live events.
Every year it’s a three day live event. It’s nine hours of coaching where I feel like every time I do a podcast, it’s like piece meal, this is like start to finish. Okay. Yeah. This is what, what are your goals? This is the kind of investor you are. So how do you pick your strategy? How do you pick your market?
And then I want you to, you know, educate yourself about these things in terms of. Building a team and taxes and accounting and all of those things. So we go over that in a more systematic fashion. So people can really come up with a plan. And it’s usually so we have the next one coming up in September.
It’s generational wealth, md. com slash event, all lowercase. And I think that’s a great way for people to get into the community be supported on their journey, but also have like a a systematic way of doing it, I
Daniel Wrenne: feel. Yeah, that’s good stuff. We’ll link to all those resources in the show notes.
In case you’re interested, you can check those out. So yeah, I like where you’re going with those things. And that’s the key is you’re getting some good education out there and, that’s what we really need to be starting with, with this stuff. So I really appreciate you coming on.
It’s, it’s been a fun conversation and I know there’s a ton more we need to talk about. So maybe we’ll have to circle back at some point, but thank you for coming on.
Dr. Param Baladandapani: Absolutely. I had so much fun, Daniel. Thank you for what you do. I think this is so important, you know, talking about all things, finances, all the questions that you pose all the topics you talk about.
I really love listening to your podcast.
Daniel Wrenne: Thanks.